FTS Confirms Federal Grid Company 2012-2014 RAB Tariffs

OREANDA-NEWS. May 24, 2012. Federal Grid Company of Unified Energy System (“Federal Grid Company” or "the Company”) (MICEX-RTS, LSE: FEES), announces that on 21 May 2012 Russia's Federal Tariff Service (FTS) confirmed the Company’s regulatory asset base (RAB) tariffs for 2012-2014.

Using regulatory asset base methodology, the following tariffs have been determined for electricity transmission across the unified national electricity grid (UNEG) for all regions of the Russian Federation except the North Caucasus and Stravropol Krai:

For the North Caucasus and Stavropol Krai, the tariffs have been set at RUB 48,540.01, RUB 53,119.60 and RUB 58,124.85 per MW month from 1 July 2012, 2013 and 2014, respectively. Tariffs for electricity transmission in the North Caucasus and Stavropol Krai during the regulatory period will grow by 10.9% in 2012, 9.4% in 2013 and 9.4% in 2014.

Rates of return have been set as follows:

on invested capital ("new capital"): 11% in 2012, 10% in 2013 and 2014

on capital invested before the start of the regulatory period ("old capital"): 6.5% in 2012, 7.8% in 2013 and 10% in 2014.

The tariffs will ensure the financing of the Company’s long-term investment programme as amended by Russia's Ministry of Energy. Implementation of the investment programme will reduce the number of "autonomous" main substations, thus connecting new consumers to the grid; it will also significantly increase the reliability of energy supply to existing customers. In addition, network efficiency will be maintained by bringing into service 50,386 MVA of transformer capacity and 13,147 km of transmission lines by the end of 2014.

Federal Grid Company adopted RAB-based regulation of tariffs on 1 January 2010.